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I.M.F. Urges Changes From China

In its first annual review of the Chinese economy since 2006, the International Monetary Fund has pressed Beijing to bolster consumption and allow its currency to appreciate more rapidly.

In its lengthy report, which was released Thursday, the I.M.F. applauded Beijing’s aggressive and speedy response to the global financial crisis, saying the government’s stimulus plan led to a robust recovery.

But authors of the report urged Beijing to make additional changes that could help rebalance the global economy as well as China’s domestic economy, moving the country away from heavy reliance on exports and investments and toward more private consumption.

Economists have grown increasingly worried in recent years about China’s huge trade and current account surpluses and the equally massive deficits in the United States, saying the imbalances are unsustainable and pose dangers to the global economy.

Now, Beijing and Washington are working together and holding high-level talks to address ways to ease the imbalances.

In its report this week, the I.M.F. said China had made substantial progress in the last two years in reducing its current account balance, from nearly 11 percent of gross domestic product in 2007 to an estimated 4 percent by the end of this year.

But the authors also warned that China’s trade and current account surpluses could soon revert to high levels.

“There is a potential for sizable current-account surpluses to return as the policy stimulus is wound down and the global economy recovers,” the I.M.F. report says.

The I.M.F. also expressed concern about a potential property bubble and a possible rise in the number of nonperforming loans following record lending from state-run banks last year.

One bright spot in the Chinese economy, though, is a rise in wages, the I.M.F. says.

“There was broad agreement (between I.M.F. and Chinese officials) that steadily rising real wages were a healthy development that would ultimately boost household income and promote consumption, leading to a more balanced economy,” the I.M.F. report says.

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